What To Expect From Newmont Mining’s Second Quarter Results

by Trefis Team
Newmont Corporation
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Newmont Mining (NYSE: NEM) will release its second-quarter results on 26th July 2018 and conduct a conference call with analysts the same day. Consensus market estimates expect the company to post an EPS (Non-GAAP) of $0.27 and a revenue of $1.81 billion, almost 41% and 3% lower, respectively, than the reported figures a year ago. The company’s declining sales volume is expected to weigh on its revenue, whereas higher gold prices in comparison to the same period last year are expected to provide some relief to this declining trend.

Newmont guided towards an annual production volume of 5.15 million ounces of gold (assuming mid-point) which is roughly 3% lower than the company’s actual output in 2017. Consequently, the company’s gold output in the first quarter was 2% lower compared to the same period last year. A more mature portfolio of reserves and the resultant lower grades of ore is leading to this decline and the company expects its output to continue and remain in the lower range in the near term, including the second quarter.  Additionally, the company’s output in the second half of the year is expected to be relatively stronger in comparison to the first half; as the company has scheduled mine sequencing and plant maintenance shutdowns during the initial period of the year.

However, comparatively higher gold prices will provide some relief to the company’s top line in the second quarter. Gold prices averaged at around $1306 per ounce, approximately 4% higher than the same period last year. Gold has been gaining strength due to the ongoing uncertainty with respect to the global trade war but has not been able to shine through completely as a consequence of a stronger dollar. However, an intensified trade war provides an immense opportunity for gold to grow as negative business sentiment due to the trade war would lead to an increased investment towards safe-haven assets, such as gold. The recent minutes of the Fed meeting also hinted towards a growing risk of a recession, which has stirred additional concern regarding global risk and thus increased the demand for gold.

Thus, we expect Newmont’s performance in the second quarter to remain weak. We have created an interactive dashboard analysis, outlining our key expectations for the company’s results for the current year. In case you have a different outlook, you can make changes to our key assumptions to arrive at your own fair price estimate for the company. 


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